We ran a workshop with Rupert Cook of Goetz Partners and David Mardle of Taylor Wessing last night before our CEO Tales event for a small group of companies that were thinking about what is involved in selling their business. Rupert was once an FT journalist and he has written an excellent book, Selling Your Technology Company for Maximum Value: A Comprehensive Guide for Entrepreneurs. In writing the book, he spoke to a huge number of buyers and sellers of businesses, and he now sells businesses at Goetz Partners so has a good deal of insight into what makes a valuable company.
The workshop highlighted some very interesting things for me which warrant sharing with a wider audience:
There are two parts to selling a business for maximum value.
- The first part is simple, maximising value at exit is about having a very valuable company. Doh! How many people forget that bit and swith right to part two?
- The other part is about managing and understanding the sales process. The key trick is to understand what is going on in the mind of an acquirer and get in their way.
Rupert has agreed to write a guest blog post on the sales process so stay tuned but something that he raised had significant resonance around the room. He introduced the notion of Blatancy – the property of being both obvious and offensive.
- Talk a lot, write a lot, stand a lot, spend a lot and drink a lot.
- Americans are great at blatancy. The British are less good so here are a few thoughts on how you can be more blatant!
- Talk a lot at trade shows, conferences, events, find the company extrovert and encourage them to evangelise.
- Win awards, get articles written about you, write articles, write guest blog posts, enter awards. (There is a UK company called Awards Intelligence with a free newsletter that lists awards that companies can apply for. They make their money by entering companies for awards on the company’s behalf on a no win, no fee basis). At this point in the discussion one of the companies involved in the discussion, chimed in that they had heard about the Fast 50 awards through a previous BLN event, had entered and come in the top twenty in this year’s list. One direct result of this has been that Grove has had calls from multiple potential acquirers.
- Work out who you want to be bought by. ‘Simon’ got his company bought by Experian by working out where Experian where exhibiting and then taking bigger and bigger stands next to the Experian stand at tradeshows. Experian saw Simon’s company grow and grow until eventually they bought him.
- Gartner, Forrester and the other research houses are very good at getting you exposed to acquirers. If you can appear in small company/interesting product category, large companies in top right are very likely to buy you. This will cost you (a lot of ) money.
- Go to the events that your acquirers are at and hang with them, drink with them, be there. Don’t go and sell to them, make sure that you are there when they want to buy something…
There were some other useful points that came out of the workshop that are probably worth sharing.
- Don’t think about selling a business unless you have been approached to sell.
- Getting a business sold needs to be a great opportunity for staff – opportunity to make money and further career.
- Find out the holes in potential acquirer’s strategies.
- Get NED on your board who has sold businesses before. For <£2k per month, you can get huge value.
- Get rid of negative people – they are a waste of time and energy. Who is holding you back?
- Every entrepreneur says that they wished they were better prepared. That they could and should have been more prepared for due diligence.
- Think every week, is there anything that I can do that could add more value? Is everything that I have done been documented – employees, client relationships, supplier relationships.
- Step outside your business once a week or once a month and ask what you would want to know as an acquirer that has not been documented.
Having being involved in the sale of 6 businesses, Rupert was spot on and I would recommend buying his book.
One point to add is to focus on clarifying the main value metrics that are likely to be used by potential buyers. Make creating bottom line profit one of these. This means timing on a sale can be driven by external buyers opportunities rather than financial pressure.